12&13-LOW-COST WATER SYSTEM IMPROVEMENTS

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Item Nos. 12 & 13 memo�andum TO: Mayor & City Council FROM: John Godwin, City Manager SUBJECT: LOW-COST WATER SYSTEM IMPROVEMENTS DATE: January 4, 2013 BACKGROUND: On November 26 and again on December 10 the city council discussed the advantages and disadvantages of selling certificates of obligation in a private sale to the Texas Water Development Board. By so doing, we will save an average of almost $70,000 annually over the next twenty years, and be able to replace ten of our very worst water lines. The council unanimously agreed in December to move forward as recommended and the sale of COs was duly advertised. STATUS OF ISSUE: By law we are now required to have the council act on two additional agenda items. The first simply formally authorizes the issuance and sale of $2.9 million in very low interest certificates of obligation, very much like other municipal debt issues. The second item is a resolution authorizing the execution of a loan forgiveness agreement with the TWDB, by which we will receive an additional $500,778 for water line replacement that we do not have to repay. Engineering for several water lines is underway now; actual construction should begin as early as August 2013. BUDGET: Cost of debt service will be approximately $160,000 per year in future Utility Fund budgets. RECOMMENDATIONS: 1) Adopt an ordinance authorizing the issuance and sale of $2.9 million in City of Paris Combination T� and Surplus Revenue Certificates of Obligation, Series 2013 for water system improvements and approving all matters incident thereto; and 2) Approve a resolution authorizing a Loan Forgiveness Agreement with the Texas Water Development Board for costs of drinking water system improvements.